>> live from pier three in san francisco, welcome to bloomberg 'w"west." the buzz about alibaba's upcoming ipo getting even hotter after the company reports huge fourth-quarter earnings. profit nearly tripled and they are making big-time progress and mobile. will this make the ipo recordbreaker? for apple is bigger better? the company working on a new ipad with a 12.9 inch screen making it bigger than the mall or mac book air. they canook to whether

grow ipad sales that have fallen for two straight quarters. turning the windy city into a hub for technology. speaking to rahm emanuel for his plan to lure more tech jobs to chicago. also a look at lance briggs they data network by putting sensors on light posts. story of thead day. code alibaba end up being the largest ipo in history? popular aftermore the company reported first-quarter profit nearly tripling to just under $2 billion. monthly mobile users grew to 188 million up from last quarter. meantime, the ipo roadshow slated to start next week. what do the numbers mean the?

this studio is cory johnson. in new york, leslie picker who covers ipo news from -- for bloomberg news. in chicago, jeff cap. the number? take on how surprising are they? >> i think they're really good numbers when you take a look at them, especially the mobile side that had been at? as the company transition from being pc dominant to the mobile side. we saw the mobile take rates improve from .98% to one point 49% this quarter. that is really a tremendous improvement. numbers pretty much expected? every time we see new numbers they are quite impressive. >> if you remember, fourth-quarter numbers were a little bit of a disappointment. fourth quarter shares trending -- the shares of trending up only slightly. they are of course a significant

shareholder. the fact that they are not moving extremely high to the upside would indicate it was not as much of a surprise. yet as you mention, very impressive. big businesseat growing very fast. so many weird one-time items. i have been reading up for the past couple of hours. i think the profit number is what is really going on is great gains in investment income. it was not about operating investment. jump inalso saw a big mobile users, 180 8 million up from 136. a third other transaction. we have seen a handful of

companies successfully deal with the change in mobile. users usingomputing andplatform with of basic people shopping. >> the question is, where is the future of growth going to come from? chinese internet users have grown. could jump to 850 million by 2015. we are looking at the e-commerce market going to potentially $400 billion. where do you see the growth coming from in the future and what are investors looking at? >> what is interesting is the market share on mobile surpassed the market share on desktop. as you have noticed, the da which isit of largely due to getting people on mobile.

it is clear they see the growth in china as mobile users. all asabout you, is it positive as it looks? >> i think there are tremendous positive. i think the mobile trend is significant, and i think the rye -- reason why it the e bitda motion of come down. i think additionally what we have not seen yet is the product development side has been ramping after magically, to. what does that mean for future growth? they have been making a huge push into the entertainment side with a lot of that acquisitions to get users on developers that make content. could we see them in the future to an entertainment type product as well. so i think that could

really ignite shares higher in something i think they will talk about during the roadshow. >> there was concern the area might have financial issues. they say it will not have a big impact on the company. where do you see red flag? >> i don't know yet. i still have a lot more to go. the calculations in the report in the quarter but they literally have monthly changes in currency comparisons that make it tricky to model out. there are lots of one-time items. modell worry about the with the shareholders do not have control of the company. some likeunlike berkshire hathaway where they do not have equal voting rights, but i think that is just concerning. year-over-year operating income growth, looks like a powerful the stress. >> do you feel investors

becoming more confident or more confused? >> the number one question that will be asked will be about acquisitions. four point 6 billion this year. an average of two percent per month. and that's her's want to know what that means and how it might mean for where the stock trades a year from now. they are looking at the price for where it is a year from now. how do the acquisitions become integrated and how do they impact the bottom line? >> leslie picker to covers acquisitions for bloomberg news. thank you both so much. big with a giant ipad. 12.9 inches. really supercharge sales? that is next. ♪

>> welcome back to bloomberg "west." size of theis the new ipad screen beginning production in the first quarter of next year according to people familiar with the matter. sales of the klein -- sales have declined for two straight quarters. what will be the key for winning market share? gene munster joins us. is bigger better in this case? >> it is. it is needed because ipad sales have been down five percent for the past year in terms of unit. i think all smiley it will open up new use cases for ipad. i think it is much needed. bit slow ona little the innovation curve on the ipad and will definitely be positive for sales.

youhat kind of use cases do see? >> you could argue medical, areas of design and manufacturing. there is a relationship with ibm and apple which said they will come out with 100 different applications working in combination and could be some things that could come from that integration. right now the simple answer is we do not fully know but clearly benefits to bigger screens in will be filling that gap. does this means for gross margins? >> it is probably negative in the ipad case. >> they tend to have lower gross margins as a starting point. 25% versus 50%. the slightlybably negative for overall gross margins. 20% exact amount would be

gross margin versus 25 for an existing ipad. >> we have seen apple start with only one screen size with the iphone. only one screen size for the ipad. we will see larger phones in just a couple of weeks. do you see a future where you really see a family of devices rather than sticking with just a few? >> absolutely. we were at a time where miniaturization was the big thing. out, peopleone came wanted bigger phones. what we have noticed in the survey work is pete all are passionate about the screen size. i would liken it to a preference in music. wrongou say it is the screen size, people get upset about it. opinion has a different

about what is the right screen size. recognizesoutsell that and that is what they are doing. >> the way people attach themselves is different than almost anything else. your models are wonderful because you make really strong assumptions about use cases. how do you imagine people will pair a certain size phone with an ipad? do you imagine people will go for the biggest iphone or smallest ipad or will they pay with certaines pair of cheap? >> there has been a surprising dynamic. you would think you have an opportunity to get a slightly bigger phone that you would not have a tablet. so the surprising part is so far the 5.5 inch tablet has not so -- sold so well.

i think that the end of the day the way this plays out over the next 6-12 months is you will see success with the 5.5 inch tablet. i think it will be negative for the 12.9ing line and inch size will still have life excessive for the enough -- further enough away from the tablet that it will be differentiated. >> any surprising things that you have discovered as a drumbeat to the iphone unveiling continues on september 9? >> the big wild card will be around payments. trying to figure out exactly what will happen in payments is subexciting -- exciting story. so far we have not heard a lot about that but i think stay tuned. >> we will be watching.

stay with us. after the break, talking about snapchat. by doing the company and $10 billion. can they keep its place as a teen sensation? we will talk to younger users next. ♪

>> i am emily chang. this is bloomberg "west." snapchat may soon be nearing $10 billion valuation club. them at morelue than three times what mark zuckerberg offered to pay for last year.

snapchat is the third most popular among millenial. 13-18% using the photo sharing app after facebook and instagram and according to data. so what makes it so attractive to teenagers and what is the the business? for gene munster back with us for the business side of the story. we also have two teenage users joining us, the note snap senior developer and ryan or book, the designer from boulder, colorado. isdo not really know what going on, we have to ask teenager how it is all shaking out. i was curious, how much are your friend still using snapchat these days? >> the usage i am seeing with my friends is changing a lot. it exploded winter break end of

2012 beginning of 2013 is where it took over my school. lot ofam seeing now is a kids using stories and less direct snap. place to share photographs throughout the day and people can view them as a story rather than communicating one-on-one with another. >> i think the novelty of direct one-on-one has worn off. we really like stories for what is happening, a window into your friends right kind of thing. like brian said, stories are , you start seeing people not interacting as much. you see it turning more into a perception app. for example, i see a lot of my friends posting stories.

something i saw what facebook early on. then it became a consumption experience. something very similar is happening with snapchat. you talk about how teenagers and it.g people are using what is your take on snapchat users and what you see from your research? andypically between 8000 10,000 students in the u.s. and in the spring surveyed the interest level went from zero to about four percent as the primary social platform. so it is still relatively small. we ask if it is the primary platform. it is the fastest-growing segment of primary usage. there is definitely -- 100 million users right now and you --ld argue what cap

whatsapp at 600 million. coolest social media platform right now? >> i think snapchat, instagram and snapshot starting to take off. in terms of coolest, it it is up there with the demographics. i am hearing about some others, but the film -- for the most part everyone is using snapchat and instagram. it is kind of interesting to see the shift away from where public identities to more networks such as snapchat and a couple of others like that. you really see students getting disheartened by how much we have

to put ourselves out there. you will notice on facebook almost every post is suddenly becoming something people have to judge and the like contest. you see a movement towards the networks that are more intimate like snapchat and others. >> people are becoming more concerned about being more public. like snapchat does not even have a business model. no advertising. they do not make money that we know of. -- >> justlding building users. i guess you could argue it is the bargain when you compare it to 18 billion. the business model has not been defined. lacks 100 million with 600 active monthly users.

that yoully a network think could stomp out other top contenders ultimately? getting more popular or less? especially with the competition you mentioned. gene mentioned about his research make sense to me. i am even surprised that high of a percentage. becoming ae snapchat full mode of medication. maybe because it is i am in the it asbut i did not see competitors. it is very much information transfer, i need to get the message out to these people. about him person conversation and you do not need to filter as much. >> someone out there thinks it is worth $10 billion. thank you.

straight from the source. gene munster always with us. really appreciate you giving us the real story on the popularity. the former chief of staff to president obama and now mayor of chicago. why is rahm emanuel selling data centers? details on that next. >> 26 minutes after the hour. that means bloomberg tv is on the market. take a look at where stocks are trading today. could not hold onto the record from yesterday necessarily. we will see. let's look at where we are today , seeing shares rising i the most in more than two months. plan. a possible takeover second-quarter earnings fell by 59% but joe came in above wall

street estimates. radioshack rising from a second day. could be getting a lifeline. about ato a shareholder financing package. ♪

>> you are watching bloomberg " west." i am emily chang. the city of chicago betting big on big data. rahm emanuel has given the green light to a project that would install mental -- metal centers on the traffic poles. it worked collect data on air quality and whether among other things. also has some privacy groups concerned. sam grobart explains. like chicago may be the second city but it is the first to launch a permanent data.tructure to collect

it will measure temperature, light, sound and cell phone signals. all from these metal fixtures mounted on plan posts along michigan avenue and other locations. the project is being dubbed chicago's array of things. quite large and stretched along the lake so we will have much more precise temperature data. >> the city has always had the data. i am not sure they always used it. >> the first 30 will be installed this fall with a plan to have 500 centers in place opened next to-three years. >> we analyze certain they don't realize we could do something on a proactive basis rather than reactive. it? >>you get ahead of because the city is very

concerned about the architecture, it was very important we put up something that is aesthetically pleasing. the inside is comprised of primarily ever shall -- commercial -- commercially available components. of the technology component inside can be purchased off-the-shelf. >> the goal? to make chicago cleaner and more efficient and safer place to live. >> trends in crime to know what's -- what tactics and strategy for police officers. >> sometimes the record of government trying to work with technology is not always sterling. sure youu try to make do not wind up in a situation like that? >> fair enough. we set the requirements. we are allowing the experts in the field to produce the technology.

the city is setting the stage for innovation and then getting out of the way. >> this does have some privacy watchdogs concerned. it will be open to the public and the software and hardware will be open source, too, so the developers and watchdogs will have access to the information, but what is the take on the concern for privacy? >> you have to always balance those. we try to be more transparent and providing information. , bloomberg news, chicago. >> the second city is doing more than just gathering big data. also looking to silicon valley or guidance on innovation and job creation. rob emanuel has vowed to double vowed- rahm emanuel has to double down on tech and has even launched a startup incubator. giving us his take on the heated

income inequality debate in an exclusive interview with sam gerber. >> what can you tell me about 1871? >> it is an innovation put together've state, city, private sector, and what happens today and start up companies is unique not only density but community. it is shared space. it has 500 companies run through it. we added a third edition of new space because of what is happening. my best example from the --system, we are from gathering tremendous rains of data. up ayoung man holds lithium battery. i said what is that? >> he said it is a new battery i have developed. i said where did you get it? he

said as part of the grant from you receive from the department of energy. saidd where are you? he 1871. that puts together the whole thing we were trying to do, basic research where he can get out of his kitchen table. not yet ready for a storefront or office, and yet have the space where he can work with oner like-minded people creating a concept to business and market and funding and grab a cup of coffee and start thinking of the next round of funding. so that is what we are doing at 1871, the flagship. we have set up relationships with other innovation spaces in london and tel aviv. we have our own foreign policy. when i became mayor, the city of chicago on innovation spaces --

zero. we are now at 11. interesting and what is unique about chicago, you have these young companies that collect creative destruction but call it the book at industry and niches and try to figure out technology to solve problems. unlike new york where god for bid something happens to the financial sector, new york drives off the side of the road, that is true on the westside. in chicago, no one sector of the economy is bigger than 15% of employment. so whether it is health care, retail, tourism, risk management, insurance -- no sector drives more than 13%. one, a tremendous debt of important. and workforce capacity.

like what we just did with life sciences of the research institution, abbott and all the other medical capacities, we have five of the 15 teaching hospitals in america right here. it makes sense to get the institutional support and create anovation space, something city or state cannot drive but harnesses the big institutional players who want to also be on the cutting edge of the next generation of technology. >> san francisco has been debating, arguing, dealing with the issue of innovation brought on by the tech sector. of the city the seventh we're losing the character of the city. how do you continue to try to attract the jobs and the companies and people they will employ while also managing the diversity and care your of

chicago and not losing that? >> i think it is a challenge. there are a couple of samples. one thing is the cost of living is a third of san francisco. deepersing stock is much than san francisco. tremendous difference. the second is public transportation. important, a parks, just shy of 1000 acres added. we're revamping every playground. the library system was just rated number one in america. differentsco has a geography with the ocean and limited space. it is a work in progress. do i say i have it perfect you

go you have to constantly be nimble. i think we have balance the growth in the market, what is happening on the side of the river and up the river, that produced -- itw has grown by a third from 30,000 to 40,000 jobs. i would say in the next decade -- obviously i would never say silicon valley has run its course, but i think the next decade is the place is like boston, chicago where you will see the next innovation of companies. >> and next up, part two of the exclusive interview with the chicago mayor am a rahm emanuel. talking about innovation reform. whether he can persuade his old boss, president obama, to do anything about it. ♪

>> welcome back. i am emily chang. immigration reform is a hot button issue and rahm emanuel hide strong opinions about it. mark zuckerberg and bill gates might agree, so what is he hearing from leaders and what in chicago?king for part two of our exclusive interview with rahm emanuel. >> you are talking to the tech industry often. what are you hearing from them and what are they looking for an >> talent. life.y of they are looking for strategic advantages. some of the other established locations in america from innovation and tech space. was way outliving

of portion to what they can pay anymore. the innovation to pay -- hold onto the workforce. it is bar none the best in the united states. the workforce is tremendously loyal so they will not be here for six weeks and decide not to go there. there is a depth of research capacity and the quality of life is affordable. raising number one in new corporate headquarters. that talent was right here in arecity. companies expanding worldwide. they're in a search worldwide for talent. is a huge strategic advantage. >> when it comes to talent, i wanted to ask you about innovation. obviouslyr and

nationwide. how can that play a role in the talent you are describing? >> i would talk about it in the larger tech economy. grandfather came to this country in 1917. words 13 years old, not a of english. his parents put him on a boat to get away from eastern europe. in two generations his grandson is the mayor of the city of chicago. it is a story of america but more portly, the story of chicago. chicago is a city of immigrants. the most american of american cities. l.a. looks to itself. all of america looks to chicago because that is where people from all parts of the country and worldcom to create and start anew. if the american story is about

giving your children the next leg up, people from all over the world and the united states beat a path here to get the children the next turn of the page. , a youngt is tech mexican couple that wants to get their children a chance and dies a business. almost 20% of the businesses are new is mrs.. you cannot beat pro small is the american story, starting your own business. you cannot beat roque small business and be anti-immigrant. it is impossible. so you have to go downtown or whatever. city to allowrst dreamers to get internships and

apply for summer jobs program. ted dreamers. we helped on the path to drivers license reform in illinois for new immigrants. also, we set up our own dreamers account here. it is for dreamers to go to college. i think the united states has a self evident self-interest here and will take the political system to react to that. the president will take action to that's the small. >> how would you describe >>rself technologically? late 20th century. i would say somewhere between -- people joke because i have a flip phone. it is because common e-mails i get. i am comfortable with technology. papers on my laptop,

listen to my music on it, download information, check information. -- am i always open to downloading a new app? no. mentioned in a couple of your comments today, libraries. seems like the library can serve as more than just a place to get a book. >> libraries have a long history in the united states. we talk about public schools appropriately. public libraries are as important to the education resource in the neighborhood as your public school. they can be as important. education is the next generation you want to emphasize. editor withmanaging

rahm emanuel. now, for look at what is coming up of the top of the hour, i want to bring in mark crumpton. >> continue our look for terror funding. where are islamic state militants getting their financing? levitt, director of the washington institute spine program on counterterrorism and intelligence will join me for fewnd table coming up in a minutes. back to you in san francisco. >> in that story they say the islamic state is looking a lot more like the taliban and when it comes to how much money they are able to raise on a single day. .> terry much so a story shows they are raking in $2 million per day. the funding coming from various sources throughout the middle east. we will explore that in detail coming up. >> oil extortion, smuggling --

thank you. coming up at the top of the hour. up next, the bloomberg west fight. how one number tells all whole lot. ♪ \ >> welcome back.

i am emily chang. and nationwide internet outage hits millions of time warner cable customers overnight. internet access has since been restored. it rained overnight maintenance on the internet back down. this could cause problems for comcast $45 billion acquisition of time warner cable to just know under review. andrew cuomo has erected the

state to look into the outage. time now for the bwest bite. >> i have news with the bite. the number is one billion 5,000,900 $46,000. that is the amount the lending platform did in a loan origination. 1,005, 946,000. the red herring dropped just a few minutes ago. loans andtive to bank surpassed some of the older competitors. people really like the company. and ipo filing in the past half-hour. business is really growing fast. >> 5 billion in loans since they were founded. over 100% loan

origination growth every year since it has been around since 2007. >> the kinds of loans their sizes loanse the will not offer. interest rates like 14% average interest rate. >> they are able to offer regular investors the opportunity to get in on the kinds of small business loans but sometimes as big as $500,000. so that hot money is an opportunity for the hard lending and something the platform allows. >> an all-star board. larry summers, john mack, mary meeker, the former internet analyst. withabout risk associating peer to peer lending? >> they have been vetted as the sec for a long time now.

that said, they have been vetted by the sec. there is a risk about people not paying. this model has not been around a long time. they talk about extra fees attached to the financiers of the deal that will happen that as long as they go through, they will have to seek a third party ticket collection of the loan. they will have to pay more money and greater transaction fees. >> some of the customers, small businesses, students? people who want to get elective surgery, things banks will not cover. >> can they make me shorter? >> then you will not need the knee defender. us.ontinue to follow lending club has just filed for an ipo. initially save $500 million. thank you for watching this edition of bloomberg "west."

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>> from bloomberg world headquarters in new york, imr crompton. this is bloomberg "bottom line." we look at the islamic state militants funding network. rahm emanuel discusses job creation. draftarmour wants to kevin durant. to our viewers here in the u.s. and those of you joining us from around the world, welcome. we have full coverage of the stocks and stories making